Petrosearch Inks Agreement to Sell Barnett Shale Project
Petrosearch Energy Corp
Monday, June 30, 2008
Petrosearch Energy Corporation has announced that its wholly owned subsidiary, Barnett Petrosearch L.L.C., has agreed to sell its 5.54455% limited partnership interest in DDJET Limited LLP to Cinco County Barnett Shale LLC, one of the other two partners in DDJET, for a cash purchase price of $36,000,000. Cinco paid to Barnett Petrosearch $1,800,000 as a non-refundable deposit to be applied to the purchase price.
Cinco currently owns a 14.45546% limited partnership interest in DDJET. The remaining partner in DDJET is the general partner that owns an 80% partnership interest in DDJET. The partners in DDJET had previously received a firm offer from a third party to enter into a definitive agreement to purchase their partnership interests.
The closing of the sale transaction with Cinco is scheduled to occur on July 18, 2008. Should the general partner elect to exercise a preferential purchase right under the DDJET partnership agreement to match the terms of the Cinco sale agreement, the closing will nevertheless proceed with Cinco on the scheduled closing date and Cinco will assume and indemnify and hold Barnett Petrosearch harmless from any obligations to sell the DDJET partnership interest to the general partner as a result of such exercise.
The process for evaluating the Company’s options and deciding the direction the Company would choose regarding the DDJET sales process was extremely complicated. The Company explored and evaluated all of the possible alternatives as to their viability, risk/reward profile and value to the Company. The Company explored (i) exercising its preferential purchase right to purchase 80% of DDJET; (ii) remaining as a partner in DDJET and raising the necessary capital to do so; (iii) merging the Company with a financially viable industry partner; and (iv) becoming a seller of the Company’s DDJET partnership interest to the third party offeror. While the Company believes that the Barnett Shale project is an economically viable project with excellent long-term growth potential, it ultimately made the decision to sell to Cinco.
“We are pleased with the results of the outcome of the DDJET sales process for the Company and shareholders. The premium value we will receive over the original offer for the Barnett Shale Project made the decision that much clearer. Our focus will now be on the prudent use of capital to develop the water flood project while still continuing to pursue strategic alternatives for the Company that will create value for the shareholders,” said Petrosearch President and CEO Richard Dole.